"It was necessary to extend the timeframes of the investigation due to the large amount of information being received and the need to carry out the investigation carefully," Mr Smith said.
"It is essential that the investigation is comprehensive given the level of public interest in the operation of Mt Eden Correctional Facility. The safety of staff and prisoners is our top priority."
The Department will continue to manage the prison while the investigation is being completed.
Phase two will now be completed by November 30 That is reviewing the adequacy of controls of prisoner violence and access to cellphones in other New Zealand prisons.
Corrections took over the running of Mt Eden in July after Serco came under fire following a series of serious incidents at the prison.
Videos have emerged of prisoners fighting and using drugs in their cells, and allegations have been made in Parliament about mistreatment of prisoners.
Corrections Minister Peseta Sam Lotu-Iiga has come under pressure over a string of allegations relating to Mt Eden prison, the most recent that an officer was suspended after fighting an inmate.
Mr Lotu-Iiga said this week that media reports on the incident were incorrect, and the guard had in fact been caught on CCTV instructing inmates on sparring technique.